Small Business, Enterprise and Employment Bill

Debate between Lord Whitty and Lord Snape

Wednesday 28th January 2015 Grand Committee

[Lord Whitty]

My Lords, I have a number of amendments in this huge group. I should point out that none of them applies to Clause 41, which, strictly speaking, is what the noble Baroness’s amendment relates to, but I have a number that apply to Clause 42: Amendments 69ZC, 71A, 72A, 74ZA, 74ZB, 87A to 87C and 89ZA. However, in view of the way this discussion is going, and my earlier points, I hope the Committee will forgive me for straying somewhat wider. For the avoidance of any doubt, I have no interests to declare, ancestral or otherwise, except as a consumer—and even then, not in January, which is probably why I am in such a bad mood.

The Committee probably should be grateful to the noble Lord, Lord Hodgson, for explaining the structure of the industry and how it works, and those situations where the tied arrangement has worked very well for both sides, but it was an explanation that was really from the point of view of the large pubcos. He also explained the context in which they work—the economic context, the social changes and so forth—and that the whole industry is under some significant pressure. But my concern in this area is for those small businesses—and they are small businesses—of the tenants who are in tied or partially tied accommodation. This Bill is called the Small Business, Enterprise and Employment Bill; it is not called the big brewers’ restrictive contracts and exploitation Bill. Were it so, it might have been closer to what some Members of the Committee appear to be wanting.

The Minister and the Government have to recognise that the Bill we are dealing with, and Clause 42 as brought over from the Commons, is a result of a quite unusual political event and a quite unusual level of lobbying, if you like, on behalf of those small businesses we are talking about. Actually, in substantive terms, it is the first major defeat that this Government have suffered as a coalition. I think, therefore, that we should take seriously what the Commons have sent to us rather than trying to redraft virtually the totality of it, even though the Government, as the Minister has made clear, accept that MRO should be in there. I would also point out to noble Lords that this is not saying that this is the end of tied tenancies; it is simply putting those tied tenancies on a fairer basis. I know that there are those—I suspect my noble friend Lord Snape is one of them—who wish to abolish tied tenancies in total. But this is in a sense much more of a compromise position.

[Lord Snape]

I would be grateful if my noble friend would not portray me as being a raving left-winger on these matters. I am not seeking to abolish the tie completely; like most people, I just want a fairer system than we have at present.

[Lord Whitty]

In that case, my noble friend and I are on exactly the same point in the ideological spectrum—as ever. We are discussing these as amendments to the pre-existing text that we received from the Commons. Government Amendment 89A effectively rewrites that proposition from the Commons.

At Second Reading the Minister said on behalf of the Government that there were things that needed to be done to ensure that the proposition was going to be workable and did not have unintended consequences. I understand that, and that means there are parts of the noble Baroness’s amendment that I would be in favour of. But under the amendment as we now have it—and we have not had it for very long; the fact that we are debating it today puts us in some difficulty given that the consultation hitherto, as I said earlier, has been somewhat attenuated—the Government’s changes in detail do a number of things. They delay the implementation because whereas the proposition adopted by the Commons set the situation on the MRO in primary legislation, therefore bringing it into effect at the earliest point when the Bill came into law, we are, instead, reliant on the drafting of the code and the bringing forward of secondary legislation.

The Government’s amendments also change a number of the trigger points, thereby diluting the effectiveness of the MRO proposition. Amendment 89A changes the threshold because it confuses the issue of tied pubs with all tenanted pubs. The Pubs Code ought to relate to all relationships between the pubcos and their tenants, whether they are tied or not. The MRO relates to the tied pubs but the threshold of defining who this applies to should be the size of the company as a whole, which includes all sorts of tenancies. Restricting it to tied tenancies lays open the possibility of them ending one or two ties to get below the 500 mark. I do not suppose I could prove it in a court of law, but there are indications that some of the pubcos are looking to split their company structure so they would not hit the 500 mark for tied tenancies. We ought not to lay that temptation before them. The Government’s proposition fails to recognise that there is a distinction between how a Pubs Code—which I think we are all in support of—operates and the MRO option, which relates only to tied tenants. I hope, therefore, that my propositions do a number of things. They separate out the issue of the code from that of the MRO. The code is set out clearly in Clause 41 and, at the beginning of Clause 42, the MRO coming into effect is not dependent on the code. The amendments in my name would also change the definition of the threshold, although most of that comes up in a later group, in relation to Clause 66.

I do not like the procedure on this Bill because the Government have misjudged the mood, not just in the Commons and among those tied tenancies and other organisations which have pressed for this. They have succumbed unnecessarily to pressure from the larger breweries. There is no need for some of the changes to the proposition that we have received. There is, therefore, a need to reinforce those rather than go in the opposite direction, which the Government’s amendments are doing. What came to us from the Commons was not perfect, but the Government are proposing to make it worse. For that reason, we all need to take a step back and look at what we agree on in the original proposition, the amendments we are discussing today and the Government’s proposed complete redraft. We need to see whether we could, in discussion with all sides of the industry, come up with something closer to an agreement in time for Report or, possibly, send it back to the Commons and let them sort it out.

We are in an unfortunate position today. This is a complex group of amendments and none of us understands all the issues. Whatever comes out of this is going to be pretty unsatisfactory and not a good basis on which to go to Report at this point in a parliamentary Session. This does need sorting: it needs to be workable and I agree with the noble Baroness that we do not want to see unintended consequences. However, we need to be clearer as to what the consequences are that have led to the propositions in the Government’s redraft.

I hope that the Government take a step back and talk to everyone concerned. The easiest way to do that would be to withdraw all the amendments today. If the Government will not do that, we are probably in for a fairly rocky time between now and Report. If we have not met at least the overwhelming spirit of what the Commons decided, the Bill will be back in the Commons and we are in for ping-pong on the Bill. I cannot believe that the Government’s business managers really want that. There is a way to deal with this quietly and consensually. It may not work, but it might, and it would get the Government out of an awful lot of trouble. As usual, I am trying to be helpful to the Government, and I hope that they heed my words and those of my noble friends.